The US audit oversight watchdog has announced the criteria it will use in considering which countries it can fully rely on to oversee auditors of foreign issuers.
Speaking at an audit regulation conference in Brussels, Public Company Accounting Oversight Board chairman, Mark Olson, said the developments were a result of commitments by himself and European commissioner, Charlie McCreevy, to advance collaborative efforts in 2007.
Olson proposed five principles, which include:
● the adequacy and integrity of the oversight system;
● the independence of the system’s operation from the auditing profession;
● the independence of the system’s source of funding;
● the transparency of the system; and
● the system’s historical performance.
Olson said the criteria would be applied by the PCAOB when assessing non-US auditor oversight bodies for the purpose of determining whether the board may place full reliance on that system in the context of inspections.
'I understand that this is similar to how the European authorities will judge whether the PCAOB is “equivalent” to the requirements under the Eighth Directive,' said Olson. 'Like the Eighth Directive, the criteria necessarily would combine aspects of an entity’s legal authority and how that authority is applied.'
He said the proposed policy statement outlines a framework for moving towards full reliance and would involve the organisation working with its counterparts to develop bilateral arrangements.
'I envision that these arrangements would need to address in greater detail the progression toward full reliance,' he said. 'Moreover, I would anticipate that mutual agreements would set forth other aspects of cooperative arrangements relevant to the facts and circumstances of each jurisdiction, including those that govern information sharing, confidentiality, and data protection.'
Further reading:
Audit oversight regulators meet in Tokyo
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